Wood fuel is wood used as fuel. The burning of wood is currently the largest use of energy derived from a solid fuel biomass. Wood fuel can be used for cooking and heating, and occasionally for fueling steam engines and steam turbines that generate electricity. The use of wood as a fuel source for heating is as old as civilization itself. Historically, it was limited in use only by the distribution of technology required to make a spark. Wood heat is still common throughout much of the world. Wood fuel, one of the oldest energy sources on the planet, could become the newest commodity market if it can overcome supply limits and green concerns as demand grows for renewable energy. Experts say that supply constraints are starting to put wood fuel into competition with the paper industry, in an uneasy reminder of existing tensions between the food industry and companies making biofuels from food crops.

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Wood has been used as fuel for millennia. The Greeks, Romans, Celts, Britons, and Gauls all had access to forests suitable for using as fuel. Over the centuries there was a partial deforestation of climax forests and the evolution of the remainder to forest management as the primary source of wood fuel. These woodlands involved a continuous cycle of new stems harvested from old stumps, on rotations between seven and thirty years. Throughout this time the preferred form of wood fuel was the branches of cut coppice stems bundled into faggots.

John Bingham, a director at consultants Hawkins Wright, said that an open market was "coming very fast" citing Eurostat data showing European Union imports of wood pellets up 42% last year.

Shaped wood pellets are made for the energy sector, while raw wood chips are used mostly by the paper industry.

Those developments suggest a gradual shift to a more transparent market beyond bilateral deals between suppliers and users, such as timber companies and utilities.

Britain's biggest coal-fired power plant, Drax, burned nearly 1 million tons of biomass last year - more than double the previous year’s figures - while burning ten times that amount of coal.

Wood pellets are said to have about 70 percent of the calorific value of coal.

The British arm of German utility RWE, RWE npower will this year convert a coal plant near London to burn 2 million ton of biomass until it closes in 2015.

Domestic UK wood fuel production, excluding recycled or waste wood, is currently about 1.5 million tons annually, according to Forestry Commission data.

But it is an open question whether there is enough volume for an open market, as utilities already have large volumes tied up in long contracts, or produce pellets for themselves.

The existing biomass power generating industry in the United States, which consists of approximately 11,000 MW of summer operating capacity actively supplying power to the grid, produces about 1.4 percent of the U.S. electricity supply.

But how green is wood or biomass combustion? In theory wood is a natural product that is periodically harvested and reused in a sustainable fashion.

Such concerns are reflected in a European Commission study of the environmental impact of biomass incentives, which will lead to new eligibility rules later this year.

The biomass industry says it is working on its own green standards, and that plantation forests and waste will be the main sources of supply.